Canada: A New Parental Insurance Programme for Quebec

This article originally appeared in the November 4, 2005 issue of The Lawyers Weekly.

Effective January 1, 2006, a new parental insurance programme exclusive to Quebec will be accessible to parents of newborn or adopted children in that province. The new programme, which replaces the parental leave provisions currently available under the federal Employment Insurance Act, will be more generous, flexible and accessible and will provide for paternity leave benefits. Also, benefits will be available to self-employed workers.

The new programme results from the adoption by the Quebec government of the Act Respecting Parental Insurance (the "Act") in May of 2001. The Act is the cornerstone of the provincial government’s strategy aimed at assisting families in dealing with the realities of today’s workplace and to help them reach a balance between work and family obligations.

The federal and Quebec governments had begun negotiating the financial elements relating to the transfer of the responsibilities for the management and the funding of the parental insurance programme in 1997. However, it was only in March of 2005 that the two sides came to an agreement. In the mean time, the Quebec government, disputing the federal government’s assertion that maternity and parental leave are matters within federal jurisdiction, instituted a court challenge, the outcome of which now rests with the Supreme Court of Canada (see article by Gillian Calder in the September 23, 2005 issue of The Lawyers Weekly).

The new programme, which will cost the Quebec government an estimated $1.08 billion per year, will be entirely funded by the province’s workers and employers, who will see a new assessment pertaining to parental insurance in addition to a reduced federal assessment for Employment Insurance. The total amount of the two assessments, however, will be greater that the amount currently paid for Employment Insurance, given the increase in benefits which will be offered by Quebec’s new programme.

A significant part of that increase results from the maximum amount of insurable earnings established under the Act. Whereas the current maximum amount of insurable earnings under the federal Employment Insurance Act is set at $39,000, the maximum amount under the provincial parental insurance programme, which is set annually by the C.S.S.T. (Quebec’s workers compensation board), is estimated to be $57,500 for the year 2006. Therefore, parents who take a leave will be eligible to receive substantially higher benefits under Quebec’s new programme.

Another important difference between the federal and provincial programmes relates to accessibility. First, under the provincial programme, parents who will have accumulated as little as $2,000 in insurable earnings during the 52 week qualifying period will be eligible to receive benefits. This is a considerably lower threshold when compared to the federal programme which requires, for example, that a employee earning minimum wage in Quebec works 600 hours for a total income of $4,560 during the qualifying period. Second, self-employed workers who have paid premiums to the parental insurance plan will be eligible to receive parental leave benefits, whereas they are not eligible under the federal scheme. Third, fathers will have the opportunity to take up to 5 weeks of paternity leave and the benefits related to this leave will not be transferable to the mother, should the father waive his right to them.

Finally, Quebec’s new parental leave programme also distinguishes itself by offering greater flexibility to parents in terms of the length of their leave and the amount of benefits they will receive per week. For example, mothers will be entitled to a maternity leave of 18 weeks during which they will receive benefits equal to 70% of their average weekly earnings or they can opt for a 15 week leave with benefits equal to 75% of their average weekly earnings. The following chart outlines the various types of leaves and the corresponding benefits, depending on the plan chosen by the parents:

Quebec’s new parental insurance programme is undoubtedly welcome news for parents and families. While it will put additional strain on employers both in terms of costs and types of leaves which they will have to accommodate, the Quebec government is clearly of the view that the benefits will outweigh the inconveniences. One thing is certain, the federal government as well as other provincial governments will keep a close eye on the situation in Quebec, which will serve as a testing ground for any future changes in their jurisdictions.

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